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El Economista: Spanish government considers seeking financial assistance to cover costs until end of the year; Spain’s Murcia region confirms it will seek a bailout in September

24 Jul 2012

El Economista reports that, according to sources close to the Spanish government, Spain is considering seeking a ‘soft’ full bailout in the form of a temporary credit line to refinance debt maturing in 2012. Meanwhile, Spain’s financial markets watchdog CNMV yesterday announced a three-month blanket ban on short-selling. The interest rate on Spain’s ten-year bonds is today getting closer to 7.6%. Earlier this morning, the interest rate on Spain’s five-year bonds was above ten-year bonds for the first time since 2001, reports Expansión.

El Mundo reports that Comunidad Valenciana has put its liquidity needs for the rest of 2012 at €3.5bn, but it is still unclear how much of this amount will be provided by the government. Meanwhile, Spain’s Murcia region has confirmed that it will ask for a bailout of up to €300m in September. El Economista reports that Andalusia is negotiating with a pool of banks over a €800m loan to avoid seeking a bailout from the government.

Open Europe's blogpost which concluded that by mid-2015, Spain faces funding needs of €547.5bn - over half its GDP and a large majority of its debt - was cited by the Telegraph's live blog.
El Economista Independent Le Figaro El País 2 El País 3 El Mundo El País 4 Expansión Expansión 2 El Mundo 2 El País 5 El Economista 2 El Economista 3 Cinco Días El País 6 Sun Telegraph Guardian Guardian 2 BBC Today Guardian FT 2 CityAM WSJ FT CityAM: Marsh & Drake FT FT Editorial WSJ Review & Outlook Irish Times Irish Times EurActiv Mail BBC: Peston Mail: Brummer Times: Leader Times: King Telegraph: Live blog Open Europe blog

Moody’s puts core countries on negative outlook as fears over impact of the crisis increase
Moody’s this morning moved its outlook for Germany, the Netherlands and Luxembourg to negative, given the increasing likelihood of a Greek exit from the euro and the increasing burden which these countries must carry to keep the euro intact. A spokesperson for the German finance ministry said it had taken note of the decision and that “the risks referred to are not new”. Moody’s also warned that German banks remain vulnerable due to large exposure to Italy and Spain. Finland is now the only triple-A country judged by Moody’s to have a stable outlook.

Writing in FAZ, the paper’s online economics editor Patrick Bernau welcomes the decision, arguing, “Rarely has it been made so clear in the public debate: the choice facing Germany is not between an unchanged eurozone or a major disaster – instead it only has the choice between two evils…But chances are that the euro exit of Greece is the lesser of these. A farewell to Athens from the common currency has now lost much of its horror…The German state would have to contend with high losses in the area of double-digit billions…but at least ultimately it will be a horror with an end. Moody’s decision has come at exactly the right time in the debate to bring the dangers home to all parties concerned.”
FT WSJ CityAM Telegraph Welt Süddeutsche Handelsblatt FAZ Times Times 2 EUobserver El País Il Sole 24 Ore BBC FAZ: Bernau Telegraph: Warner FT: Sri-Kumar WSJ: Mattich Guardian

Troika returns to Athens as SYRIZA calls on Germany to provide a clear position on Greece’s role in the eurozone
The EU/IMF/ECB troika returns to Athens today to conduct its latest assessment of the Greek economy following increasing fears of a Greek exit from the eurozone. After rumours that the IMF was planning to limit future funding to Greece, the Fund reaffirmed its commitment to the adjustment programme – although it did not directly deny the rumours. The coalition leaders will meet today in an attempt to finalise the plans for saving an additional €11.5bn in 2013-14, which need to be presented to the troika in the near future.

Bloomberg reports that the German government has suggested that Greece sell very short term debt (bills) in order to cover its financing gap next month. In an interview with the Passauer Neue Presse, FDP General-Secretary Patrick Döring urged Greece to leave the eurozone, saying it would enable “markets to regain confidence”. Kathimerini reports that SYRIZA leader Alexis Tsipras yesterday called on German Chancellor Angela Merkel to make it clear whether she wants Greece to leave the euro or not.
Kathimerini Kathimerini 2 EUobserver EUobserver 2 Kathimerini 3 Telegraph BBC FT PNP: Döring Spiegel

In a meeting of the General Affairs Council earlier today, EU member states officially agreed on a 2.79% increase in payments in next year’s EU budget. The Dutch, Swedish and UK delegations voted against while the Austrian delegation abstained. The increase is expected to increase the UK’s contribution to the budget by around £350m.
EU Council Press Release Open Europe Research: Reforming the EU budget

La Stampa reports that the association of Italian provincial governments (UPI) has warned that the government’s planned spending cuts could put the opening of the next school year at risk. Separately, Italy’s financial markets watchdog Consob yesterday announced a week-long ban on short-selling of shares in banks and insurance companies.
La Stampa La Stampa 2 Telegraph Repubblica FT

The EU/IMF/ECB troika visited Cyprus yesterday amid signs that the country could need a bailout of up to €13bn, more than expected, with €7bn of this going towards propping up the banking sector, according to the WSJ.

EU foreign ministers yesterday tightened sanctions against Syria, condemning threats by the regime to use chemical weapons, and increasing EU humanitarian aid to those trying to flee the violence.
EurActiv European Voice

The EU is set to suspend sanctions imposed on Zimbabwe a decade ago once a credible referendum is held on a new constitution. However, EU foreign ministers said that individual sanctions would remain against President Robert Mugabe.
BBC European Voice Guardian

FTD reports that the Irish National Asset Management Agency (NAMA), the state agency set up to purge banks of their most toxic commercial property loans, has begun demolishing some of the country’s 2,000 partially completed property developments on the grounds of health and safety.

The FT notes that UKIP leader Nigel Farage has amassed a Europe-wide following on YouTube, with
Italian, Greek and even Slovak versions of his speeches routinely pulling in hundreds of thousands of views.

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